European Commission Blocks Booking’s Acquisition of Etraveli Group

The European Commission on Monday announced that it has prohibited, under the EU Merger Regulation, Booking Holdings’ proposed 1.63-billion-euro acquisition of Flugo Group Holdings AB, known as Etraveli, from CVC Capital Partners.

According to the Commission, the acquisition would have allowed Booking to strengthen its dominant position on the market for hotel online travel agencies (OTAs) in the European Economic Area (EEA).

“Booking did not offer remedies that were sufficient to address these concerns,” the Commission said.

The Commission’s decision follows an in-depth investigation of the transaction, which would have combined Booking and Etraveli, two leading providers of OTA services in a concentrated industry. Booking is the leading hotel OTA while Etraveli, headquartered in Sweden, is one of the main providers of flight OTA services in Europe. Booking, whose brands include Booking.com, Agoda and KAYAK, had notified the European Commission about the transaction in October 2022.

During the investigation, the Commission received feedback from a large number of stakeholders, including hotels and competing OTAs. Market participants were concerned that the transaction would strengthen Booking’s dominant position on the market for hotel OTAs in the EEA, reduce competition and increase prices for hotels and, possibly, for consumers.

Didier Reynders, Commissioner for Justice, speaking during the press conference on the Booking-eTraveli merger case. Photo source: European Commission

“Our decision to block the merger means that European hotels and travellers will not be further limited in the options available to offer their services and book their trips. This also means that the drive for competitive prices and innovation will be preserved in this important part of the travel industry,” said Didier Reynders, Commissioner for Justice.

HOTREC applauds the decision

HOTREC, the umbrella association of hotels, restaurants, pubs, cafes and similar establishments in Europe, applauded the Commission’s decision, which “recognises the negative impact of the merger on various parts of the tourism ecosystem, including the accommodation sector”.

According to the association, if the merger was approved, “Booking could cross-sell its different services and further strengthen its dominance in the hotel market”. HOTREC’s latest distribution study showed that Booking’s market share on the hotel accommodation market has increased considerably from 60 percent in 2013 to 71 percent in 2021.

“HOTREC has long been raising alarms about Booking’s market power and its impact on European hoteliers. Today’s decision of the European Commission takes into account those concerns and can only be welcomed,” HOTREC Director General Marie Audren said, adding that the association will remain vigilant and strongly react to any business decisions that negatively impact SME hotels.

Booking to challenge Commission’s decision

On its part, Booking said it intends to appeal the European Commission’s decision to prohibit the company’s acquisition of Etraveli Group to the European courts.

Highlighting that the transaction was cleared unconditionally by multiple competition authorities, including those in the United States and the United Kingdom, Booking said the Commission has “fundamentally misconstrued” the highly competitive travel markets for flights and accommodations and that its decision is an “unexplainable departure” from its own Non-Horizontal Merger Guidelines.

“The European Commission’s decision not only departs from settled law and precedent but it deprives consumers of travel options that they are entitled to have,” said Booking Holdings’ Chief Executive Officer, Glenn Fogel.

Moreover, Booking also announced an extension of an existing and long-standing commercial partnership agreement between Booking.com and Etraveli Group through at least December 2028.

“While the acquisition would have allowed Booking.com to fully harness all of Etraveli Group’s capabilities and management team to offer a better flights product and better deals for consumers through, among other things, greater strategic and commercial alignment and enhanced integration, the continued partnership with Etraveli Group will further strengthen and accelerate Booking.com’s ongoing work to build a frictionless global flights offering, which is already live in over 50 countries, and deliver even more value to travelers,” the company said.